PART OF THE CHALLENGE OF KAYAKING is seeing the small rock ahead of you for what it really is—the tip of a massive boulder below the water’s surface. Stock investors have to spot potential hazards, too. “Buying and selling stocks is a lot about controlling risk,” says Randy Farina, a senior portfolio manager with Exencial Wealth Advisors, headquartered in Oklahoma City. But knowing when to sell can be tricky. “It’s not easy because there are multiple factors involved. Buying a stock might be easier than selling.”
Emotions can get the better of you. Selling when a stock is down can feel like you’re giving up, maybe too early. And selling when a stock price is rising can feel counterintuitive, even though it may be the best move. You can’t time your exit in a stock perfectly. But some events can point toward opportune times to get out. We walk through five such situations below.
1. A change in fortune. In many cases, the decision to sell a stock should go back to why you bought it. “Know what you own and why you own it,” says Deborah Ellis, a Los Angeles certified financial planner. The reasons can vary: You bought a stock for its dividend payments, or its high-growth prospects or as a speculative bet. In any event, if the stock no longer fulfills its purpose in your portfolio, “it’s time to sell,” says Ellis.
This story is from the August 2021 edition of Kiplinger's Personal Finance.
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This story is from the August 2021 edition of Kiplinger's Personal Finance.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 8,500+ magazines and newspapers.
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